BOULDER, Colo., Aug. 7 /PRNewswire-FirstCall/—Horizon Organic Holding Corporation (Nasdaq: HCOW - News), which markets the leading brand of certified organic foods in the United States, grew sales 21 percent to $54.0 million -- 21 percent in the U.S. and 20 percent in the U.K. -- during the second quarter of 2003, compared with the second quarter of 2002. Earnings from continuing operations declined to $534,000, or $0.05 per diluted share, from $647,000, or $0.06 per diluted share, in the second quarter of 2002. These results include $691,000 in transaction costs associated with the announced merger with Dean Foods Company, which on an after-tax basis impacted earnings by $0.04 per diluted share. These earnings, excluding the $0.04 of transaction costs, compare favorably to analysts' consensus of $0.08, which also does not include transaction costs. Net income for the second quarter of 2003, including discontinued operations and transaction costs, was $183,000 or $0.02 per diluted share, compared with net income of $353,000, or $0.03 per diluted share, in the 2002 second quarter.
On June 30, Horizon Organic and Dean Foods announced a definitive merger agreement under which Dean will acquire the 87 percent of Horizon Organic's shares that it does not already own for $24 a share.
"Our leadership in the organic industry, coupled with the growing public awareness of the many advantages of healthy organic foods, continues to generate strong sales growth. With the backing of Dean Foods and its nation- wide distribution network, this trend is likely to accelerate," said Chuck Marcy, president and CEO of Horizon Organic. "At the same time, the Dean Foods offer provides an immediate opportunity for our shareholders to capitalize on this growth."
Highlights for the second quarter included: * A 23 percent increase in U.S. milk sales driven by ultra pasteurized milk, which now accounts for 57 percent of total milk sales. * An increase in milk distribution to 65 percent of U.S. grocery stores during June compared with 56 percent in June 2002. * A 54 percent increase since the first quarter of 2003 in single-serve milk sales, reflecting the Company's expanded distribution at Costco. * An increase of 19 percent in sales of Rachel's Organic branded products in the U.K., driven by growth of 69 percent in Rachel's Organic retail branded milk.
For the first six months of 2003, income from continuing operations of $1.5 million or $0.14 per diluted share was unchanged from the first half of 2002. Again, these results include $0.04 per diluted share in transaction costs.
After losses on discontinued operations in both years, net income for the first six months of 2003 was $370,000, or $0.03 per diluted share, compared with a loss of $1.3 million, or $0.12 per diluted share, in the 2002 period.
Six-month sales rose 22 percent to $105.8 million in the first half of 2003. U.S. sales were up 22 percent to $86.8 million, with milk posting a 25 percent gain and dairy up 16 percent. Juice sales declined 6 percent. In the U.K., sales rose 19 percent to $19.0 million.
The Company is continuing to work with an experienced dairy farmer as well as new prospective buyers for the sale of its Idaho dairy farm.
Marcy said the Company is excited about the rollout of the nation's first organic infant formula in September and a new line of baby and children's yogurts that are expected to be on the shelf late this month. Marcy said that with new product introductions and ongoing distribution gains, the Company continues to support its previous guidance of a 20 to 25 percent increase in sales in 2003, and earnings per diluted share from continuing operations in line with analysts' consensus which does not include transaction costs.
Conference Call
Horizon Organic management will host a conference call on Thursday, August 7, 2003 at 11 a.m. Eastern Time to discuss the Company's year-to-date performance and pending merger. To hear the call, participants should call 1-800-603-5503 ten minutes prior to the event, or visit the Company's website at www.horizonorganic.com for a live simulcast and replay of the call.
Horizon Organic markets the leading brand of certified organic foods in the U.S. and the leading brand of organic milk in both the U.S. and U.K. In the U.S. its products include organic milk, a full-line of organic dairy products, organic eggs and juices. In the U.K., the Company markets organic yogurt, milk and butter under the Rachel's Organic brand. For more information, please visit the Company's web site at www.horizonorganic.com.
Note on Forward-Looking Statements: This news release contains forward- looking statements that involve risks and uncertainties. Future events may differ materially from those discussed herein, due to a number of factors, including uncertainties related to the Company's ability to continue to maintain and expand its brands, avoid adverse publicity, manage its supply chain efficiently, continue and effectively manage its rapid growth, and maintain key management, as well as the volatility in the cost of organic farm products, increased competition, changes in consumer preferences, and increases in charges under governmental dairy programs. These factors and others are more fully discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
HORIZON ORGANIC HOLDING CORPORATION
SELECTED FINANCIAL DATA
(In thousands, except per share data)
Three Months Ended June 30,
2003 %NS 2002 %NS
Net sales $53,978 100.0% $44,713 100.0%
Growth vs. prior year 20.7% 15.8%
Cost of sales 36,891 68.3% 30,646 68.5%
Gross profit 17,087 31.7% 14,067 31.5%
Selling expense 11,993 22.2% 9,900 22.1%
General and administrative 3,194 5.9% 2,659 5.9%
Transaction costs 691 1.3% -- 0.0%
Intangible asset amortization 329 0.6% 326 0.7%
Operating income 880 1.6% 1,182 2.6%
Interest and other, net (4) 0.0% (122) -0.3%
Income from continuing operations
before income taxes 876 1.6% 1,060 2.4%
Income tax expense (342) -0.6% (413) -0.9%
Income from continuing operations 534 1.0% 647 1.4%
Loss from discontinued operations, net (351) -0.7% (294) -0.7%
Net income (loss) 183 0.3% 353 0.8%
Earnings per share from continuing
operations
Basic $0.05 $0.06
Diluted $0.05 $0.06
Loss per share from discontinued
operations
Basic ($0.03) ($0.03)
Diluted ($0.03) ($0.03)
Earnings (loss) per share
Basic $0.02 $0.03
Diluted $0.02 $0.03
Weighted average shares outstanding:
Basic 10,330 10,179
Diluted 10,650 10,617
HORIZON ORGANIC HOLDING CORPORATION
SELECTED FINANCIAL DATA, Continued
(In thousands, except per share data)
Six Months Ended June 30,
2003 %NS 2002 %NS
Net sales $105,798 100.0% $86,931 100.0%
Growth vs. prior year 21.7% 14.1%
Cost of sales 72,196 68.2% 59,014 67.9%
Gross profit 33,602 31.8% 27,917 32.1%
Selling expense 23,301 22.0% 19,331 22.2%
General and administrative 6,391 6.0% 5,179 6.0%
Transaction costs 691 0.7% -- 0.0%
Intangible asset amortization 658 0.6% 651 0.7%
Operating income 2,561 2.4% 2,756 3.2%
Interest and other, net (53) -0.1% (310) -0.4%
Income from continuing operations
before income taxes 2,508 2.4% 2,446 2.8%
Income tax expense (978) -0.9% (954) -1.1%
Income from continuing operations 1,530 1.4% 1,492 1.7%
Loss from discontinued operations, net (1,160) -1.1% (2,813) -3.2%
Net income (loss) 370 0.3% (1,321) -1.5%
Earnings per share from continuing
operations
Basic $0.15 $0.15
Diluted $0.14 $0.14
Loss per share from discontinued
operations
Basic ($0.11) ($0.28)
Diluted ($0.11) ($0.26)
Earnings (loss) per share
Basic $0.04 ($0.13)
Diluted $0.03 ($0.12)
Weighted average shares outstanding:
Basic 10,317 10,161
Diluted 10,607 10,589
Selected Balance Sheet Data
June 30, December 31,
2003 2002
Working capital $22,052 $23,250
Total assets 131,479 128,207
Current liabilities 49,601 45,546
Long-term debt, less current portion 11,475 14,110
Stockholders' equity 67,486 65,653
HORIZON ORGANIC HOLDING CORPORATION
SELECTED FINANCIAL DATA
(In thousands, except per share data)
Income From Continuing Operations Before Transaction Costs Data (a non-
GAAP financial measure) (1)
Three Months Six Months
Ended June 30, Ended June 30,
2003 2003
Income from continuing operations
before transaction costs* $956 $1,952
*Reconciliation to Generally Accepted
Accounting Principles (GAAP):
Income from continuing operations
before transaction costs $956 $1,952
Transaction costs, net (422) (422)
Income from continuing operations 534 1,530
Loss from discontinued operations, net (351) (1,160)
Net income 183 370
Earnings Per Diluted Share From Continuing Operations Before Transaction
Costs Data (a non-GAAP financial measure) (2)
Three Months Six Months
Ended June 30, Ended June 30,
2003 2003
Earnings from continuing operations
before transaction costs** $0.09 $0.18
**Reconciliation to Generally Accepted
Accounting Principles (GAAP):
Earnings from continuing operations
before transaction costs $0.09 $0.18
Transaction costs, net ($0.04) ($0.04)
Earnings from continuing operations $0.05 $0.14
Loss from discontinued operations, net ($0.03) ($0.11)
Earnings $0.02 $0.03
EBITDA Data (a non-GAAP financial measure) (3)
Three Months Six Months
Ended June 30, Ended June 30,
2003 2003
EBITDA from continuing operations*** $1,975 $4,611
EBITDA from discontinued operations*** 675 531
Total EBITDA*** 2,650 5,142
***Reconciliation to Generally Accepted Accounting Principles (GAAP):
Three Months Ended June 30, 2003
Continuing Discontinued Total
Operations Operations Operations
Total EBITDA $1,975 $675 $2,650
Less interest and other, net
(excluding amortization of
loan fees of $25 and $54 for
the three and six months
ended June 30, 2003,
respectively) (21) 434 413
Less income tax expense (benefit) 342 (225) 117
Less depreciation 602 -- 602
Less loss on disposal of
Idaho Dairy in lieu of
depreciation -- 817 817
Less amortization (including
amortization of loan fees of
$25 and $54 for the three and
six months ended June 30, 2003,
respectively) 518 -- 518
Net income (loss) 534 (351) 183
Six Months Ended June 30, 2003
Continuing Discontinued Total
Operations Operations Operations
Total EBITDA $4,611 $531 $5,142
Less interest and other, net
(excluding amortization of
loan fees of $25 and $54 for
the three and six months
ended June 30, 2003,
respectively) (1) 865 864
Less income tax expense (benefit) 978 (741) 237
Less depreciation 1,169 -- 1,169
Less loss on disposal of
Idaho Dairy in lieu of
depreciation -- 1,567 1,567
Less amortization (including
amortization of loan fees of
$25 and $54 for the three and
six months ended June 30, 2003,
respectively) 935 -- 935
Net income (loss) 1,530 (1,160) 370
(1) Income from continuing operations before transaction costs, as
defined by the Company, represents income from continuing operations
excluding transaction costs associated with the proposed merger with Dean
Foods Company. Transaction costs associated with the proposed merger
include primarily investment banking fees, legal fees and consulting
fees. These costs were incurred solely in connection with the proposed
merger of the Company with Dean Foods and are not a part of the Company's
ongoing operating expenses. Therefore, excluding these costs provides an
important additional perspective on the operating costs of the Company
and the comparison of such to historical periods.
(2) Earnings per diluted share from continuing operations before
transaction costs, as defined by the Company, is computed by dividing
income from continuing operations excluding transaction costs associated
with the proposed merger with Dean Foods Company by the weighted average
number of common shares outstanding increased for potentially dilutive
common shares outstanding during the period. Transaction costs
associated with the proposed merger include primarily investment banking
fees, legal fees and consulting fees. These costs were incurred solely
in connection with the proposed merger of the Company with Dean Foods and
are not a part of the Company's ongoing operating expenses. Therefore,
excluding these costs in earnings per diluted share calculations provides
an important additional perspective on the earnings per diluted share
calculations of the Company and the comparison of such to historical
periods.
(3) EBITDA, as defined by the Company, represents earnings before
interest and other, net; income taxes; depreciation (including
anticipated losses on disposal of the discontinued operations in lieu of
continuing depreciation) and amortization. EBITDA is presented because
it is a widely accepted financial indicator used by certain investors and
analysts to analyze and compare companies. Additionally, management
believes that EBITDA provides an important additional perspective on the
Company's ability to service its long-term debt and to self-fund other
investment opportunities. EBITDA has not been presented as an
alternative to operating income or cash flows from operating activities,
or as an indicator of operating performance, and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with GAAP.
Source: Horizon Organic Holding Corporation
source: http://biz.yahoo.com/prnews/030807/lath019_1.html 7aug03
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